Pebblebrook had last week disclosed that it had offered to buy LaSalle in an all-stock deal that valued the company at more than $3 billion. The offer was rejected by LaSalle's board.

Shares of LaSalle rose about 1 percent to $29.28 in premarket trading, giving the company a market capitalization of about $3.31 billion.

In a letter to LaSalle's management, founder of the hedge fund, Parag Vora, said Pebblebrook's initial offer was "inadequate", but presents a "compelling" opportunity for a more efficient cost of capital and stronger cash flows.

If the two hotel owners merge, it would form the second-biggest lodging real estate investment trust by equity market capitalization in the United States.

"We believe a sale of the entire Company would maximize value for shareholders," Vora said, after his hedge fund became the third biggest shareholder in LaSalle. (bit.ly/2H52bxs)

Vora urged LaSalle, owner of Park Central San Francisco and Westin Michigan Avenue, to form an independent strategic committee to negotiate with Pebblebrook and gauge interest from other potential buyers.